ICMA revamps sovereign default rules

By Tessa Wilkie
28 Aug 2014

The International Capital Market Association is releasing revised and updated collective action clauses (CACs) to deal with defaults for syndications not already subject to the euro area model collective action clauses introduced in January 2013. The documentation includes for the first time a standard pari passu clause in a move intended to allow for a more predictable process in sovereign debt restructurings.

The move stems from concerns that current documentation allows for a minority of creditors to delay a restructuring of sovereign debt that the majority of creditors favour or that disputes could arise over the wording of the pari passu clause.

ICMA published a consultation paper in December 2013 ...

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